The Golden Sate’s vast natural resources – scenic coastlines, lush forests, rugged mountains, underground oil and gas deposits and fertile agricultural lands are well-known. Yet, one than most people people don’t typically think of – deep underground formations of salt water and depleted fossil fuel formations – are among the largest and most valuable resources California has yet to cultivate. These can play a key role in a successful and smooth transition to a low-carbon economy if used for carbon capture and sequestration (CCS).

CCS involves the separation of pure carbon dioxide from a mix of air emissions, compression of that gas, and injection of the compressed gas into underground rock formations where it stays for thousands to millions of years. To ensure that injected gas stays underground, and also prevent other environmental impacts, proper precautions must be followed so that projects are appropriately located, sized, operated and monitored. I will be presenting on this to a blue ribbon panel of experts at the California Energy Commission (CEC) later this week.

California’s opportunity to engage in CCS is sizable. In 2008, the CEC and Department of Conservation,completed an in-depth assessment of the options for the state and found between 75 and 300 metric gigatons of storage capacity in underground salt water formations (saline aquifers) and 5.2 metric gigatons in depleted oil and natural gas reservoirs. This capacity represents hundreds of years of the state’s greenhouse gas (GHG) emissions, well beyond the time needed to transition away from fossil-fuel based energy.

According to the National Energy Technology Lab, there are currently 200 projects around the world that are using or planning to use CCS – and many more will be needed in the near future if we are to reduce GHG emissions to sustainable levels.

These projects represent a big investment opportunity. Last year, EDF, in partnership with Duke University, released a study estimating that $15 billion in investments would likely be made by 2025 to retrofit existing coal fired power plants to enable CCS. This year, the Clean Air Task Force released a study estimating $120 billion in private investment spending by 2030 through deployment that is aligned with recent Congressional CCS proposals.

California’s proactive policies to produce low-carbon energy coupled with vast sequestration potential has put the state in a favorable position to capitalize on the coming national push for CCS commercialization. This could lead to California getting a significant portion of domestic CCS-related investments.

One example is the Hydrogen Energy Project in Bakersfield that has attracted $300 million in federal funding and $2.5 billion in private financing. For this investment to materialize. though, California must stay ahead of the curve, moving in a coordinated manner to welcome project developers while also imposing rigorous project evaluations and oversight.